Investors interested in Building Products - Wood stocks are likely familiar with Armstrong Flooring (AFI - Free Report) and Rayonier (RYN - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Armstrong Flooring has a Zacks Rank of #1 (Strong Buy), while Rayonier has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AFI has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
AFI currently has a forward P/E ratio of 35.16, while RYN has a forward P/E of 38.73. We also note that AFI has a PEG ratio of 1.33. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RYN currently has a PEG ratio of 7.75.
Another notable valuation metric for AFI is its P/B ratio of 0.73. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, RYN has a P/B of 2.38.
These metrics, and several others, help AFI earn a Value grade of A, while RYN has been given a Value grade of D.
AFI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AFI is likely the superior value option right now.